16 Jun CALCULATE THE INTERNAL RATE OF RETURN FROM THE INVESTMENT IN EDUCATION.
(Calculate with Excel only) Consider Bob, who just turned 18 years old and is about to embark on a four-year degree program. The tuition for the course is $20,000 per year. Bob currently works at Vons making $18,000 per year and will have to surrender his job to pursue the degree. Based on the BLS Occupational Handbook Bob anticipates his earnings will be $25,000 more each year following graduation (starting when he turns 22) until he retires on his 60th birthday. For your calculations you can assume all payments and income are incurred-received at the end of each year.
a. Calculate the net present value of this investment assuming he can borrow/save at an interest rate of 5%.
b. Calculate the internal rate of return from the investment in education.
c. Based on the NPV and IRR, should he undertake the program? Why?
2. (Calculate with Excel only) Consider Carl, a 26 year old native San Diegan who has just graduated with a B.A. in Economics. He has received two job offers, one in Irvine that pays him $40,000/year and another in Miami, Florida that will pay him $44,000/year. He is planning on working in the position, regardless of the location, until he finishes his 20th year of work. His added monetary costs in Miami will be $2,500 each year and he expects psychic costs totaling $5,000 the first 5 years only. He can borrow/save at a rate of 3.2%. Using the information provided and assuming all costs and benefits are incurred/accrued at the end of each year determine the following:
a. Calculate the net present value of his migration (round to hundredths).
b. Calculate the internal rate of return of his migration (round to hundredths).
c. Based on the NPV and IRR, should he migrate? Why?
3. Visit the BLS website link provided here and using the report (table A, June 2017) complete the following:
a. (Use Excel only) Using Figure 7.1 in the text as your template, generate a pie chart reflecting the Compensation Components for Private Industry.
b. Do the same as above for State and Local Government data.
c. Compare the two pie charts and determine which sector (Private or Government) is providing a compensating wage differential?
4. Go to the Bureau of Labor Statistics website provided here and create a monthly labor force participation rate time-series graph for the years 2000-2017 for each of the following demographics. You may cut and paste your graphs in this document or generate your graphs in excel. (use seasonally adjusted data only):
a. Men >20
b. Women >20
c. Teenagers
d. Bachelor’s Degrees and Higher (use left panel A-4 data)
e. Less than a High School Diploma (use left panel A-4 data)
5. Using the information from your graphs in #4 respond to each of the following:
a. Do you notice any turning points where the trend’s shifted during the time frames specified? Explain.
b. For each graph what, if anything, changed during the Great Recession (12/07-6/09)? Explain.
6. Go to the Bureau of Labor Statistics website provided here to answer the following: What was the seasonally adjusted number of employed, unemployed, and civilian labor force (not percentage but a count of people in correct denominations) for the total population December 2007 and June 2009? How did the Great Recession affect these numbers? Explain.
7. Go to the Bureau of Labor Statistics website provided here to answer the following: What is the seasonally adjusted unemployment rate for each level of educational attainment (
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